Refer to the information provided in Table 6.4 below to answer the question(s) that follow.
Table 6.4
$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Number of } \
\text { Donuts per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 80 & \
\hline 2 & 150 & \
\hline 3 & 200 & \
\hline 4 & 230 & \
\hline 5 & & 10 \
\hline \begin{array} { c }
\text { Number of } \
\text { Burritos per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 60 & \
\hline 2 & 108 & \
\hline 3 & 144 & \
\hline 4 & 168 & \
\hline 5 & & 12 \
\hline
\end{array}$$
-Refer to Table 6.4. If the price of a donut is $2, the price of a burrito is $4, and Luigi has $12 of income, Luigi's utility-maximizing combination of donuts and burritos per day is
A) 1 donut and 2 burritos.
B) 4 donuts and 1 burrito.
C) 2 donuts and 1.5 burritos.
D) indeterminate from this information.

Question

Refer to the information provided in Table 6.4 below to answer the question(s) that follow.
Table 6.4
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Donuts per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 80 & \
\hline 2 & 150 & \
\hline 3 & 200 & \
\hline 4 & 230 & \
\hline 5 & & 10 \
\hline \begin{array} { c } 
\text { Number of } \
\text { Burritos per Day }
\end{array} & \text { Total Utility } & \text { Marginal Utility } \
\hline 1 & 60 & \
\hline 2 & 108 & \
\hline 3 & 144 & \
\hline 4 & 168 & \
\hline 5 & & 12 \
\hline
\end{array}$$
-Refer to Table 6.4. If the price of a donut is $2, the price of a burrito is $4, and Luigi has $12 of income, Luigi's utility-maximizing combination of donuts and burritos per day is
A) 1 donut and 2 burritos.
B) 4 donuts and 1 burrito.
C) 2 donuts and 1.5 burritos.
D) indeterminate from this information.

Quizplus · Accepted Answer

To maximize utility, Luigi should equate the marginal utility per dollar spent across all goods. The marginal utility per dollar spent is calculated by dividing the marginal utility by the price of the good. From the table, the marginal utility of the 5th donut is 10, and the price of a donut is $2, giving a marginal utility per dollar of 5. The marginal utility of the 5th burrito is 12, and the price of a burrito is $4, giving a marginal utility per dollar of 3. Therefore, donuts have a higher marginal utility per dollar spent than burritos. With $12, Luigi can maximize his utility by purchasing 4 donuts ($8) and 1 burrito ($4), fully utilizing his $12 budget.

Refer to the Information Provided in Table 6 -Refer to Table 6